Executive Benefit Program Usage Dipped in 2014

Companies report a slight 3% drop in plan participation
rates from 2013 to 2014, according to the MullinTBG/PLANSPONSOR Executive Benefits
Survey.

Survey respondents ranked quality plan education and communication
as the most important feature when deciding to enroll in a
non-qualified program.

“Clear communication of plan features and education about
the benefits of deferring compensation to meet financial planning goals are key
drivers of plan participation and satisfaction for both participants and plan
sponsors,” says James McInnes, senior vice president for total retirement solutions at Prudential Retirement.

Consistent with previous years, the survey revealed a large
majority (84%) of companies offer non-qualified deferred compensation plans
(NQDCP) to their highly compensated employees, putting it at the top of the
list as the most common executive benefit among survey respondents. Among companies offering these
plans, three-quarters rely exclusively on a third-party recordkeeper to
administer the plan and rank quality of service team, willingness to be consultative in NQDCP services, and ease of online user experience as the top three factors they use to choose a
recordkeeper.

“As more companies offer and improve their non-qualified
programs, recordkeepers need to understand each plan sponsor’s needs and help
ensure the plans are designed in a way that keeps participants engaged and
increases deferral rates,” explains Yong
Lee, chief operating officer at MullinTBG. “Whether that’s by coupling these
plans with financial planning benefits, which 48% of survey respondents
already provide, or other offerings, companies must work with their providers to
design executive benefits that will attract and retain valued employees and
most importantly, help them realize successful outcomes for their financial
future.”

Research shows the criteria for determining NQDCP
eligibility varied among categories. For a strong majority (85%), the NQDCP is offered “to
provide a vehicle for retirement savings,” up from 77.8% in 2013. The
strategy of accessing informal funding to manage NQDCP asset-to-liabilities is on
the rise as well, used by 62%, up from 57.2% in 2013.

Nearly three-quarters (74%) of plan sponsors rate their plan
as either “effective” or “extremely effective,” with 58% that provide financial
planning benefits doing so at no cost to the participant. However, McInnes explains
that executive benefits will not accomplish their stated goals without the
engagement of participants.

The survey includes 232 responses from plan sponsors sharing
insights about their executive benefits offerings.